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Resale flat in Sengkang or BTO flat in Bidadari?

Friday, September 23, 2016

Dear AK, 

I have been reading your blog for quite sometime and have since taken a thought about financial prudence before any purchase.  

I am in a dilemma to get a BTO or resale flat. 

Currently i have got a queue number to select for the recent Bidadari Bto however i have to wait for 4 years to get the flat. 

My spouse do not have a house here and my parents place do not have enough space for us to live in therefore we have to rent. 

By waiting (3rm flat rental planning for kids) my rental will probably work out to be $65,000 (for the entire waiting period).

The Bidadari BTO 4rm will probably cost about $490,000. (A new 99yr flat, near my parents place)

A resale flat in Hougang/Sengkang 4rm perhaps $350,000. (A 30yr old flat)

Now the question is if it is financially prudent to give up my BTO and get a resale flat instead. 

Bidadari BTO is an attractive location and maybe a good future investment (when?) the property goes up. 

However when i look at it financially it might not be that attractive. 

Although it is close to my parents home and a fabulous location.

Can you talk to yourself on this matter?

Your Sincerely,

Hi V,

$490K for a 99 year lease or $350K for a 69 year lease? 

The choice is clear. 

Throw in the rental cost of $65K (while waiting for the BTO to be built) in the meantime, it gets a bit murky. 

I would think of it as your 99 year leasehold flat costing $555K instead. 

Does this help? 

Sounds pretty pricey, doesn't it?

Personally, I am very wary of buying very old (99 years) leasehold properties for many reasons but from the perspective of cost, the resale Sengkang flat is rather pricey too. 

$350K for 69 years of remaining lease, top it up to 99 years and you will see a price tag of $502K. 

Based on this alone and nothing else, I would get the BTO flat in Bidadari. 

Better location in more ways than one and for really only a 10% premium. :)

Best wishes,

Related post:
Buying a HDB flat old or new?


AK71 said...

Raymond Ng on FB:
"Just to add... after MOP, he could probably sell higher. As for the 30 years 4 rm flat, it will depreciate more unless the resale is in good location (near MRT...)"

Unknown said...

Hi V,
just to share personal experience.
Brother got queue number for Pinnacle >5yrs ago; but do not want to wait for years to move in and also feel price is high.
So he gave up and bought a resale.

Today, he regreted.
If he has lock on Pinnacle, sell and bought his existing resale; his resale is free.

No other family members dare to mention "Pinnacle" in front of him.

Eventually you have to decide for yourself.


Nick said...

A BTO flat will always be cheaper compared to the resale flats in the same vicinity.

Another option is to buy a resale HDB flat while waiting for BTO flat to be completed. You will have to fulfill the 30 months Minimum Occupancy Period (MOP) for the resale flat (which should not be an issue as most of the BTO takes at least 3 to 4 years to TOP).

According to HDB when you book a BTO flat, you can still buy a resale flat (without CPF Housing Grant) as interim accommodation, besides the option of renting a room/flat from open market.

But you would have to sell the resale flat within 6 months of getting the keys to BTO flat.

As HDB rules might change, you might want to consult HDB on this matter.

Unknown said...

One more comment -

HDB has a scheme to provide people waiting for BTO subsidized rental flat. If you have a baby, even easier to get it. Will probably reduce your rental cost by 50% (although location may or may not be where you want it to be)

E said...

Morning AK,

Yea, saw that post sometime back too..

87 years lease at Buangkok 400K is 4.597k/ yr
99 years lease at Bidadri 500k is 5.050k/yr

Differences I can take & invest to generate passive/for rainy day, will it be better?
Also understand there is a lot of misc need to pay.

Coz min will go is need 3 bed room, & wont think of moving already - so very likely to get a 4 room.

Meanwhile also worry about the loan/HLE part, just did a estimation using the online calculator, it is show HLE amount is about 380k.
Not sure why, ask ask around too, those better cert & around my age with better pay HLE lower than mine.

Pls talk to yourself if possible.

Thanks & With Best Regards

AK71 said...

Hi E,

This has always been a difficult topic.

However, it becomes easier if, to you, the location does not matter and if a shorter lease does not matter. ;)

If the motivation is to simply have a home and to preserve capital to invest for income, then, go with the financially less demanding option. :)

AK71 said...

National Development Minister Lawrence Wong recently warned in a blog post that people should not be buying very old Housing Board (HDB) resale flats in the hopes that they would be selected for the Selective En bloc Redevelopment Scheme (Sers). Under Sers, the Government picks HDB estates it wants to acquire for redevelopment and gives flat owners market-rate compensation, and replacement units at discounted prices.

Recent trends have shown that young buyers are willing to pay high prices for ageing HDB resale flats as they assume that the Government will bail out flat-owners and offer Sers, or other schemes with generous payouts as the lease nears its 99-year expiry date.


Anonymous said...

Adding on to the analysis. I would think the Bidadari is a better choice, because it's "near parents'". Especially if the couple is planning for kids. It's really very helpful to have parents living nearby (preferably within 15 min walking distance). Sometimes, when you need the extra help with your kids, it is easier.

I have 2 friends who didn't stay near their parents, now 1 pair have moved to one of their parents' area. The other is kinda stuck because the parent (staying in central region) doesn't want to move and to move over is expensive.

VT said...

Hi AK71,

Just to update that I have got the Bidadari BTO.
Meanwhile, I am happy that I have got a 3rm rental flat from HDB @800/mth located at Toa Payoh. The lease will only expire when I have got my keys to my BTO.


AK71 said...


Thanks for bringing another consideration to the table. :)

AK71 said...

Hi V,

Congratulations on the purchase!

Your rental unit is in a great location too.

Good value for money.

Gong xi gong xi! :D

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